Tory sale of government air fleet was a terrible business decision, executed incompetently

PHOTOS: Not this Beechcraft King Air, maybe, but three a lot like it are now plying the friendly skies of North Dakota, which is a great deal for their new owner thanks to the generous former government of Alberta. Below: The unsold Alberta Government Dash 8, and former Conservative Alberta premiers Alison Redford and Jim Prentice.

Can I please say “I told you so”?

Alert readers will recall that back in September 2014 I wrote in this blog that “privatization of Alberta’s air fleet will cost citizens money.”

Now the Progressive Conservative turkey vultures are coming home to roost and Alberta taxpayers will have to foot the bill.

Oh, OK … What I really said was “privatization of Alberta’s air fleet will cost citizens money and change nothing.”

So maybe I was a little bit wrong about the “change nothing” bit. Something sure as heck changed, and it’s hard to believe that public outrage over the whole “Air Redford” fiasco didn’t play a meaningful role in the demise of the 43.5-year Conservative dynasty and the election of Alberta’s first NDP government.

But the point was, is and ever shall be, as recent news stories are starting to make clear, that we Albertans are most definitely not better off because of the hurried effort to sell off the four government aircraft on the instructions of Alberta’s last Progressive Conservative Premier, the hapless Jim Prentice.

It turns out the whole mess, brewed up in the dying days of the PC government for reasons of political expedience and market fundamentalist ideology, resulted in taxpayers taking a $5-million bath on the price fetched by the three Beechcraft King Air planes the government managed to unload.

This is somewhat different from what Mr. Prentice told reporters in February, when he boasted that “most have sold at higher than the asking price, so this is dollars back to Alberta citizens.”

However, as revealed by the 2014-2015 Treasury Board and Finance annual report last week, it turned out the government’s expenses were $5 million higher “due to a loss on the sale of airplanes as proceeds were less than net amortized book value.”

This also means, although this is not the point of the latest round of news coverage, that Albertans will continue paying through the nose for the necessary alternative.

The political expedience was the result the political booby trap left for Mr. Prentice’s government to defuse by the misuse and abuse of the government air fleet by his predecessor, Alison Redford, and her political staff. The embarrassment only got worse with the revelation of the idiotic “Fakes on a Plane” scheme, in which made-up passengers were block booked and then cancelled at the last moment so the ex-premier and her aides could fly in privacy.

The misuse of the planes sprang from the essential dishonesty of someone who has never been identified in Ms. Redford’s inner circle, not to mention the hands-off attitude of Doug Horner, the finance minister, who was supposed to be responsible for the management of the air fleet.

But the market-fundamentalist Opposition Wildrose Party got double value by screaming for the air fleet to be privatized as a way to fix the problem with the government’s ethics – which, if things had gone on as everyone then expected, wouldn’t have made a speck of difference to how the government behaved.

Indeed, the only reason the scheme was discovered was because the flights were on publicly owned aircraft.

This, however, is were the ideology came in. Exactly like the Wildrose Party, Mr. Prentice was inclined to privatize the fleet for purely ideological reasons. He, just like them, was a pure market fundamentalist. So the expectation privatization would also solve a political problem faced by the PCs was just a bonus.

The fact it was a bad business decision didn’t matter to him, and certainly didn’t matter to the Wildrosers – they had exactly the same point of view about that sort of thing as the Tories, as then-Wildrose Leader Danielle Smith and Mr. Prentice proved conclusively three months later when Preston Manning officiated at the political shotgun wedding of their caucuses.

But just because it was politically expedient and ideologically convenient didn’t mean it was a sound business decision, because, as I wrote at the time, “the four small aircraft served a useful purpose for the citizens of Alberta.”

“For flights within Alberta, government aircraft save time for legitimate government work and allow for double tasking by the premier and his or her staff. … With government aircraft in a province the size of Alberta, officials can fly in and out of some of the smallest airports, work between meetings and avoid having to be paid while they line up for commercial flights.”

However, thanks to the business incompetence of the Conservatives, who were always crowing about how they knew about that kind of stuff, in addition to having to pay for airplane services for senior provincial government officials, we taxpayers are now going to have to build in a margin to cover corporate profits, plus higher private-sector insurance and borrowing costs.

As for the North Dakota charter company that bought the three aircraft, at least they sound like sharp business people. The remaining unsold aircraft, an old Dash-8, continues to rack up expenses, so the NDP Government of Premier Rachel Notley will need to do something about that one too.

Regardless, whether or not the NDP agrees this wasn’t a smart business decision by the PCs, it doesn’t mean it would be easy or cheap for them to put things back the way they were before Mr. Prentice’s wrecking crew blundered onto the airfield.

Having had the Tories sell off these valuable public assets at a loss, it’s not at all clear they could be cost-effectively replaced. Even if the NDP wanted to keep the planes, they and we will probably just have to live with the Tories’ lack of business acumen – which, take note, Wildrose Finance Critic Derek Fildebrandt continues to endorse.

Well, there’s nothing unique about this.

Consider the money the Tories loaned 30 years ago to former wiener magnate Peter Pocklington, not to mention the cash we’re still forking over to manage the remnants of the company the elderly resident of the wealthy enclave of Palm Desert, Calif., left behind and the taxes he owes Albertans and will never pay.

You can count on it, too, that many more examples of this kind of spectacular business incompetence will come to light in the months ahead.

It’s going to take more than four years to clean up nearly 44 years of conservative mismanagement.

And while I’m not very optimistic this will happen, thanks to the constant propagandizing efforts of the right and its friends in the media, examples like these should kill the fantasy that conservatives of any stripe understand business better than people in more liberal political parties.

David Climenhaga

Topiary

July 20th, 2015

The PCs & WRP are like cults! Now hopefully we can also begin to understand whose pockets were filled when we were subsidized for monthly electricity bills several years ago. That’s got to be in the billions.

CuJo Calgary

July 20th, 2015

To be fair, when Prentice said “… most have sold at higher than the asking price …”, he was simply alluding to the fact that they sought ridiculously low asking prices well below market value to expedite a sale and kill an issue that plagued them while, once again, stiffing us. He may not have been lying … but he was being dishonest and disingenuous and amply displayed his utter lack of business acumen. How could any bank ever justify paying him millions?

Thank you Jimmy “I Can’t Even Wait For The Votes To Be Counted Before I Quit” Prentice.

Great article. The entire staff at ATS were treated poorly by the ministry, Prentice and anyone involved including HR. Were were left for days with no answers, lies that we were safe and justified by the rest of the government and the auditor general, and never given a true chance to defend ourselves! As of today, Sept13/15, the government is still cleaning up a large financial mess, paying for an empty hangar and a dash 8 that is a paper trail nightmare to attempt to sell all along having people involved that have no understanding of aviation and aircraft. Someone should start adding up the extra expenses of lost work hours, airline tickets and change fees for switching flights, cancelled tickets, rental cars, extra hotel nights that never were neede with aircraft going to calgary and back each day, milage payouts, gas expenses, meal allowances, and should I continue? How many communities have seen government officials in their city or town? I know how many we went to each week prior to the sale! And finally, thankfully gone from their positions; shame on those PC members that enjoyed the safe travels we provided day after day , week after week but then caved to one new and arrogant premier’s ideology and poor decision making rather than stand up and demand an honest evaluation of the department rather than a first morning idea of political optics! The public deserves the truth and those involved should be summoned to tell the truth!